1 Perry Investments bought 2,000 shares of Able, Inc. common stock on January 1, 2015, for $20,000 and 2,000 shares of Baker, Inc. common stock on July 1, 2015 for $24,000. Baker paid $2,400 of previously declared dividends to Perry on December 31, 2015. At the end of 2015, the market value of the Able stock was $18,000 and the market value of

the Baker stock was $28,000. The stocks were purchased for short-term speculation. Perry owns 10% of each company.

If the securities purchased are classified as available-for-sale securities, Perry should record the year-end adjustment as:

DRFair value adjustment-Available-for-

sale securities 2,000

CRUnrealized change in value of

available-for-sale securities

Equity 2,000

DRUnrealized holding gain on available-for-sale

securities 2,000

CRFair value adjustment-available-

for-sale securities 2,000

DRFair value adjustment-available-for-sale

securities 2,000

CRRealized holding gain on trading

securities 2,000

DRUnrealized holding gain 2,000

CRFair value adjustment-available-for-sale

securities 2,000

2 Under IFRS, SPEs are consolidated when evidence indicates that the reporting company "controls" the SPE. Control is presumed if which of the following conditions exist?

I. The reporting entity performs activities on behalf of the SPE.

II. The SPE has decision-making powers over the activities of the reporting entity.

III. The reporting company has the right to obtain the majority of the benefits of the SPE

activities.

IV. The reporting company retains the majority of the residual or ownership risks related to

the SPE or its assets.

I and II only

I, II, and III only

III and IV only

I, II, III, and IV

3 On January 1, 2015, the Husky Corporation purchased 90% of the Spartan Company's voting stock for $2,700,000. Spartan's net assets had a book value of $2,450,000; the fair value of Spartan's building was $325,000 greater than its book value. The book value of Husky's net assets immediately after the acquisition of Spartan totaled $6,850,000. Husky used the acquisition method to prepare its consolidated balance sheet.

What is total stockholders' equity on the January 1, 2015 consolidated balance sheet?

$9,300,000

$6,850,000

$7,150,000

$7,120,000

4 On January 1, 2015, the Husky Corporation purchased 90% of the Spartan Company's voting stock for $2,700,000. Spartan's net assets had a book value of $2,450,000; the fair value of Spartan's building was $325,000 greater than its book

value. The book value of Husky's net assets immediately after the acquisition of Spartan totaled $6,850,000. Husky used the acquisition method to prepare its consolidated balance sheet.

What is the amount of goodwill to be reported on the January 1, 2015 consolidated balance sheet?

$495,000

$202,500

$550,000

$225,000

5 Consolidation adjustments that are made to prepare consolidated financial statements of the parent and subsidiary are required in order to:

obey the state laws.

avoid double counting.

follow tax laws.

eliminate transactions with third parties.